A diplomatic crisis is engulfing part of Borneo, after Filipino rebels seized control of a remote section of Malaysia’s Sabah state as part of an unresolved territorial dispute that stretches back centuries. Malaysian security forces have surrounded 100 to 200 members of the Royal Army of Sulu, who have holed up in the village of Lahad Datu for the past two weeks in order to press their historic claim to the land. The Philippine and Malaysian governments are now engaged in tense negotiations in order to resolve the dispute without the use of force. The rebels, who hail from the autonomous island province of Sulu in the southwestern Philippines, had been given until midnight on Tuesday to voluntarily leave the area, but Manila has been desperately trying to negotiate an extension to this deadline to avoid bloodshed and a tense standoff currently hangs in place.

The leader of the rebel unit is the brother of Jamalul Kiram III, one of the two main claimants to the title of Sultan of Sulu. Back in the 17th century, before the Philippines existed in its present form, the two principle sultanates in the region were Sulu and Brunei. In 1658, the Sultan of Brunei for some reason gave Sabah to the Sultanate of Sulu, which today is considered part of the Philippines. However, the picture is further complicated by an 1878 deal between the Sultanate of Sulu and the British North Borneo Company, in which Sabah was leased to the Europeans on a rolling contract. To this day, the Malaysian government pays a token sum, equivalent to around $1,500, to the Philippines every year in recognition of this continuing arrangement. The Royal Army of Sulu interprets this deal as a lease that can be canceled, while Malaysia believes that it represents the permanent transfer of the territory.

It does not appear that the Malaysian authorities are willing to give up the land, which boasts valuable petroleum reserves, palm-oil plantations and also serves as an agricultural and manufacturing hub. Regional commentators have accused the Sulu rebels of trying to exploit past claims as a gateway toward ensuring future prosperity. “The governments of Malaysia and the Philippines are trying to manage this incident carefully,” Jonah Blank, senior political scientist specializing in Southeast Asia for RAND Corp., a global policy think-tank, tells TIME. “We’ve seen many Muslim rebel groups arise or take refuge in the southern part of the Philippines, and Malaysia has brokered a fragile cease-fire: neither Kuala Lumpur nor Manila is eager to see that fall apart.”

Philippine President Benigno Aquino III on Tuesday appealed to Kiram to instruct his brother to end the occupation. “If you are truly the leader of your people, you should be one with us in ordering your followers to return home peacefully,” he said during a statement aired on national TV. On Sunday, Manila sent the Philippine navy ship BRP Tagbanua to Borneo carrying Filipino-Muslim leaders, social workers and medical personnel for a “humanitarian mission” to bring their compatriots home. However, Royal Army of Sulu sources indicate that the rebels are not willing to entertain such a retreat.

Some observers believe that the timing of the occupation is designed to disrupt the Malaysian national elections that are due before the end of June, and the issue has now become a political hot potato domestically. The Center for Media Freedom and Responsibility, a Philippine NGO, on Tuesday released a joint statement condemning the arbitrary detention of three al-Jazeera journalists who were in Sabah to report on the standoff. The group was eventually released after being held and interrogated for at least six hours. Liew Chin Tong, a Democratic Action Party MP and shadow Defense Minister for the Pakatan Rakyat opposition coalition of Malaysia, tells TIME that the country is now suffering the consequences of decades of poorly enforced border controls. “Sabah is a key state which was previously seen as a safe zone for the government but now keenly contested by the opposition,” he says.